InternationalFiscal Policy Barometeron tax havens

LatviaIntroductionof the euro

Malta Value-added servicesaround AIFMD-measures

International Tax, Audit, Accounting and Legal News ECOVIS info . Issue 3/2013

Karl BonannoECOVIS Malta Consultants Limited/ Mdina Trust Services Limited, Balzan, Malta

Ecov i s info 3/20132

A t a time of high national debt and tight budgets in

many industrialised countries, the fiscal authorities are now in hot pursuit of tax offenders and greater pressure is being put on tax havens. This was reason enough for Ecovis to ask its in-ternational partner firms how the situation is developing in their respective countries from the point of view of taxpayers and more especially of busi-ness firms. Partners of Ecovis in 33 countries participated in this fiscal barometer survey – more than ever before. Just how sensitive the topic of tax havens is becomes apparent in the answers to the question, “Would you consider your coun-

try as a “tax haven”, making it attractive for international in-vestors to invest in your country mainly for reasons of low taxa-tion?“ In the responses of the partner firms, 27% place their country in this category; besides those you would expect, such as the Netherlands, with its tax-ex-empt licencing income, or Qatar, with its tax immunity or lower tax rates for foreign investors, we also find such states as Bulgaria, which scores points with gener-ally low flat rates for income and corporate tax.On the other hand, some coun-tries normally considered tax eva-sion favourites, such as Ireland, Malta, Singapore and Switzer-land, cannot or can no longer be classified as tax havens according to the respective Ecovis firms in each of these countries. Switzer-land, for example, is indeed no

longer a safe place for foreign tax evaders to hide their mon-

ey because of the growing pressure put on it by the

USA and the EU. And Singapore is now putting the OECD standards gov-erning the cross-border exchange of information for tax purposes into ac-tual practice.Irrespective of the prob-lem of tax evasion to low-tax countries, the glo-bal trend is towards the “transparent taxpayer” where national taxation is concerned. In 70% of

the countries surveyed, busi-nesses and institutes are legally obliged to inform the authorities of matters concerning third par-ties which are fiscally relevant, such as, for example, the pay-ment of wages and salaries or the distribution of dividends. In almost every second country, these regulations have been on the increase in recent years. The picture is similar with regard to the digital methods of collat-ing tax data, often before a tax return is submitted; it is now employed in 60% of the coun-tries. In almost the same number of countries (55%) the fiscal administrations have upgraded their systems in the past three years. In no single country have the fiscal authorities reduced their efforts. More and more countries are availing themselves of anony-mous tip-offs to trace cases of tax fraud. However, countries ac-tively encouraging such tip-offs are still in the minority (36%).At the same time, 88% of the countries surveyed allow taxpay-ers to file subsequent returns for taxable income not yet declared, thus permitting them to avoid criminal investigation and pro-secution which would be the con-sequence if the fiscal authorities were to catch them out. How ever, in several countries additional penalties are imposed upon vol-untary disclosure, in addition to the corresponding back taxes and interest payable on arrears.

FISCAL POLICY BAROMETER

Tax Offenders and Tax Exiles in the CrosshairsMost governments are stepping up measures to fight tax fraud and tax evasion.

AuthorKarl Bonannokarl.bonanno@ecovis.com

“Irrespective of the problem of tax evasion to low-tax countries, the global trend is towards the transparent taxpayer where national taxation is concerned.”Karl Bonanno, ECOVIS Malta Consultants Limited/Mdina Trust Services Limited, Balzan, Malta

TIPRead more:www.ecovis.com/eifpb-tp

Ecov i s info 3/20133

“It is important to note that the introduction of the euroshall not effect the continuity of contracts and other legal instruments.”Diana Lapina, ECOVIS Convents, Riga, Latvia

AuthorAlexander Samonig, ECOVIS Con-Fidas d.o.o., Belgrade, Serbia

alexander.samonig@ ecovis.com

TIPRead more:www.ecovis.com/balcans

T o effect the efficient and transparent transition from

Latvian lats to the euro as of 1st January, 2014, the Parliament of Latvia, Saeima, has issued the Law on the Procedure for the Introduction of the Euro, here-inafter referred to as the Law. The Law came into effect on 1st

March, 2013. According to the Law the date of introduction of the euro to

the Republic of Latvia shall be

the date on which the E u r o p e a n Council ab-rogates the

derogat ion for the Repub-

lic of Latvia in accordance with the

provisions of the consolidated version of the Treaty on the Eu-ropean Union and the Treaty on the Functioning of the European Union. It is important to note that the introduction of the euro shall not affect the continuity of contracts and other legal instru-ments. References to lats in legal instruments existing on the date prior to the date of introduction of the euro shall be considered

as references to the euro from the date of introduction of the euro. At present 1st January, 2014, is set as the date for the introduction of the euro to the Republic of Latvia.

You will find more about the following topics in the long version (see link for down-load or QR Code):

principles of rounding introduction of the euro in cash, non-cash and electronic money cash changeover

non-cash resources, electronic money or single-purpose pay-ment instruments

converting prices for goods and services

redenomination of equity cap-ital stocks (shares) of capital companies

InTROduCTIOn OF ThE EuRO TO LATVIA

Latvia is to join the European single currency The government of Latvia is assiduously undertaking all the measures necessary for the introduction of the euro as the official currency of Latvia.

AuthorMag.iur. Diana Lapinadiana.lapina@ecovis.com

TIPRead more:www.ecovis.com/euro-lv

I n autumn ECOVIS Confidas highlighted the Western Balkans and did the next step. We

were sponsors of REBEC fair & conference – www.rebec.rs and hosted it in our Ecovis premis-es in Belgrade under the slogan “united differ-ences”. Mid 2013 we can have a clear perspective for the region. North-west of Belgrade there are logistic centers with more than 250,000 m2 in development. Logistics is the frontrunner of the industry, which is doing feasibility for relocation. Two elements are crucial and they are labor costs, availability and education and funding of invest-ments by the governments mainly of Serbia and of Macedonia.

Ecovis moderated four mayor panels. Besides the fact that the discussion was oriented to our entre-preneur approach the panelists were the “Who is Who” of their profession. In conclusion we can from the bottom of our hearts advise you to take a first look at the Western Bal-kans. The second look, the feasibility face the hot spots have to earn themselves. The success-ful track record is motivating: Bosch, Continental, Falke, Oetker, Dunkermotoren, Panasonic Vossloh-Schwabe, GEZE, LEONI, Mühlbauer, Knauf, Bau-erhin, Wacker Neuson, Gruner, Grammer, Atair, Mehler, Linde, Stada, Messer, Xella, Fresenius and Dräxlmaier.

Serbia / united opportunities – Western Balkans

Ecov i s info 3/2013 4

I t is only by recognizing the risks which may threaten its existence that makes it possible

for a company to adopt the appropriate counter-measures to deal with these risks. The prime fo-cus should not be on a complete overhaul of the management approach hitherto, nor on establish-ing another administrative department. Instead, it is preferable to develop a structured procedure for all the actions and functions relevant to the recog-nition and handling of risks, the elements of which of course already exist within the management body as a whole but not in a compact and struc-tured manner.Experience shows that the regular and structured analysis of the company-specific risk situation noticeably improves the quality and reliability of short- and long-term planning. High-quality risk management is the ideal tool for achieving com-petitive advantages, ensuring the organizationally independent continuance of the company, and, finally, protecting the company’s own assets. By,

on the one hand, further developing existing rules, and, on the other, learning the lessons taught in times of crisis, a reasonable division of tasks which can be absorbed smoothly into the project risk management as a whole has proven to be effec-tive.Properly defined stages in the management cy-cle, clearly recognizable throughout the company, must be organised on a firm footing. Appropri-ate and especially useful methods of risk analy-sis and evaluation of those risks detected need to be put in place. Everyone within the company should be made aware of the great significance of risk management, and risk-oriented behaviour should be put into ex-tensive practice from the top to the bottom in the everyday running of the company.

“Everyone within the company should be made awareof the great significance of risk management.” Reimond Menke, ECOVIS MKM Menke & Kollegen GmbH Wirtschaftsprüfungsgesellschaft, Oldenburg, Germany

AuthorsAlexander Littich ECOVIS L+C Rechtsan-waltsges-

ellschaft mbH, Landshut, Germanyalexander.littich@ecovis.com

TIPRead more: www.ecovis.com/eu-taxfraud

AuthorsReimond Menke reimond.menke@ecovis.com

TIPRead more about medium-sized company risk manage-ment: www.ecovis.com/ sme-riskmanagement

M inimum sanctions for tax crimes, a cross-bor-der tax identification number, an EU tax-pay-

er’s charter and stronger common measures against tax havens and aggressive tax planning; these are just some of the ideas that the Commission put for-ward in June 2012 to improve the fight against tax fraud and evasion in the EU. On the basis of this, in March 2012, the 27 EU heads of state asked the Commission to develop ideas and solutions to improve the fight against tax fraud and tax evasion because an estimated €1 trillion in public money is lost to the EU in this manner every year . As a response, the Commission drew up an action plan in December 2012 that contains over 30 meas-ures to be developed now and in years to come. As a starting point, member states are urged to use the tools already at their disposal. They should pro-perly apply EU rules on administrative co-operation and information exchange. These include the revi-sion of the EU Savings Tax Directive, a negotiating mandate to update the existing EU savings taxation

agreements with Switzerland and other European third countries, and the Quick Reaction Mechanism to fight VAT fraud.In the short term, EU measures will include a taxpay-ers’ code to improve compliance and standardized forms for the exchange of information. The Com-mission will review the anti-abuse provisions in the Directives on Parent-Subsidiary, Mergers and Interest and Royalties. In the medium and long term, meas-ures will include an EU Tax Identification Number (TIN), an EU tax web portal, guidelines for tracing money flow. and possibly common sanctions for tax offences.At the same time the German Bundesrat requests the term allowed for criminal prosecution of any case of tax fraud to be extended to up to ten years, not least because of the increasing numbers of cases of tax fraud detected since 2010 in connection with foreign investments (from: Draft Law 17/13664).So whoever has to correct his or her tax returns in Germany should do this now!

Risk management in medium-sized companies

Combating tax fraud and evasion: Eu Commission sets out concrete measures

5Ecov i s info 3/20135

The coming into effect, on July 22nd 2013, of the Alter-

native Investment Fund Manag-ers Directive (AIFMD) will be a watershed event for most me-dium sized fund managers in the EU. The AIFMD was proposed in April 2009 and intended to become mandatory by July 2014, so we are currently in the gearing-up period, and applica-tions to each state’s financial regulator will need to be submit-ted for compliance with Level 2 measures. The AIFMD will affect all managers of collective invest-ment schemes and funds other than UCITS if these are marketed or managed in the EU, subject to transitional arrangements and de minimis provisions. The ben-

efit will be EU-wide passporting rights and to the extent a man-ager is AIFMD compliant will de-velop into a positive marketing connotation along the lines ac-quired by the UCITS label.Among the crucial measures re-quired under the AIFMD, several relate to custody of the fund as-sets and their valuation, as well as the implementation of a risk management program and a re-muneration policy. Additionally, there will be increased scrutiny and specific regulations regard-ing delegation and outsourcing of key functions, with the aim of prohibiting so-called letter-box entities. As a first step, the Malta Financial Services Authority has issued self-assessment question-

naires to help apply the de mini-mis provision and lead to the identification of actions required to achieve AIFMD compliance. ECOVIS Malta/GRC has been providing governance, compli-ance and risk management serv-ices to funds and fund manage-ment companies based in Malta for the past year, after due regu-latory approval. Working either as a turnkey solution provider or in partnership with other special-ized firms, we are in a position to offer value-added services relat-ing to the transition and imple-mentation of AIFMD measures, in particular on risk manage-ment policies, procedures and knowledge transfer or ongoing monitoring as necessary.

Whilst our London office has al-ways grown organically since we first started it in 1983 we have recently made our first acquisi-tion of another firm. Henry Bach & Co is a small practice run by a single partner, who is retiring and employs three staff. The clients are mainly media related businesses such as freelance pro-ducers and journalists fitting in with our key sector focus on the media industry. We will continue to seek out and pursue acquisi-tion targets which complement and strengthen our service lines.Author Christopher Jenkins, ECOVIS Wingrave Yeats, London, UK christopher.jenkins@ecovis.com

It is not always a good brand name, size and international presence which are the key to a competitive edge where quality is concerned. This was the conclu-

sion arrived at by Deutsches In-stitut für Service-Qualität, a com-mercial market research institute dedicated to improving the quality of service in Germany. They inter-viewed 300 managers of medium-sized enterprises in Germany who generally find greater expertise in matters concerning medium-sized enterprises not in auditors belong-ing to the “Big 4” but rather in other firms. Judged according to the criteria of expertise, project stages, performance, recommen-dations, repeat engagements and co-operation, Ecovis achieved out-standing results. Overall the man-agers interviewed ranked Ecovis in top position, as the “best auditors for medium-sized enterprises”.

AuthorAnthony V. Xuereb anthony.xuereb@ecovis.com

“The Alternative Investment Fund Managers directive will be a watershed event for most medium sized fund managers in the Eu.” Anthony V. Xuereb, ECOVIS Malta/GRC

Ecovis London acquires henry Bach & Co

The best auditors for medium-sized enterprises in Germany: Ecovis

MALTA

AIFMd update: Challenges and Opportunities

ABouT ECoVISEcovis is a leading global consulting firm with its origins in Continental Europe. It has over 4,000 people operating in over 50 countries. Its consult-ing focus and core competencies lie in the areas of tax consultation, accounting, auditing and legal advice. The particular strength of Ecovis is the combination of personal advice at a local level with the general expertise of an international and interdisciplinary network of professionals. Every Ecovis office can rely on qualified specialists in the back offices as well as on the specific industrial or national know-how of all the Ecovis experts worldwide. This diversified expertise provides clients with effective support, especially in the fields of international transactions and investments – from preparation in the client‘s home country to support in the target country. In its consulting work Ecovis concentrates mainly on mid-sized firms. Both nationally and internationally, its one-stop-shop concept ensures all-round support in legal, fiscal, managerial and administrative issues. The name Ecovis, a combination of the terms economy and vision, expresses both its international character and its focus on the future and growth.

LEGAL nOTICEPublisher . ECOVIS International, Ernst-Reuter-Platz 10, 10587 Berlin, Germany, tel. +49 (0)30-31 00 08 55, fax +49 (0)30-31 00 08 56Realization . Editornetwork Medien Gmbh, 80805 Munich, GermanyEditorial Department . Kurt Bülow, denmark; Vanessa hadinegoro, netherlands; Robert McCann, united Kingdom; dr. Ferdinand Rüchardt, Germany; Andreas Karaolis, Cyprus; Carmen Vasile, RomaniaECOVIS info is based on information which we consider to be reliable. however, due to constantly changing laws, liability may not be assumed.